English Ltd. analyzed the relationship between total factory overhead and changes in direct labour hours. It found the following: Y = £6,000 + £6X
The Y in the equation is an estimate of
A) total variable costs.
B) total direct labour hours.
C) total factory overhead.
D) total fixed costs.

Question

Quizplus · Accepted Answer

The equation Y = £6,000 + £6X represents a linear cost function where Y is the total factory overhead, £6,000 is the fixed cost, and £6X represents the variable cost per direct labour hour.